Days may be numbered for “10-year rule”

May 29, 2006

By Tom Philpott: Military Update

The Senate Armed Services Committee has voted to end the “10-year rule” used by the government for more than two decades to screen court orders seeking automatic payment of retired pay to former military spouses.

The change is one of three adjustments to the Uniformed Services Former Spouses Protection Act (USFSPA) in the Senate’s version of the 2007 defense authorization bill (S 2766). All three are intended to streamline administration of the controversial 1982 law, said Senate staff.

If approved by the full Congress, the changes would be the first made to the military ex-spouse law in 14 years. They would ease how future court orders are handled for former spouses rather than past court orders.

The 10-year rule has required the Defense Finance and Accounting Service (DFAS) to turn away requests for automatic payment of retired pay to ex-spouses unless the couple had been married at least 10 years during which the service member completed 10 years of creditable service.

The rule’s elimination “would solve a lot of problems,” said Marsha Warthen, board president of Ex-POSE, a military former spouse support group. “We are contacted regularly by spouses who just missed the 10-year requirement.”

The 10-year rule would end 120 days after the bill is signed. Retroactive sharing of benefits based on the change would be prohibited.

Change two in the Senate bill would direct DFAS to comply with all court requests for making cost-of-living adjustments to ex-spouse shares of retirement. DFAS now applies COLAs only to ex-spouse shares set as a percentage of a retiree’s annuity. COLAs are not applied to ex-spouse shares that courts state in dollar amounts. This change would apply to court orders that take affect 90 days after the bill is enacted.

The third change would end a requirement that DFAS notify retirees and provide them copy when DFAS receives a court order directing division of retired pay. The Senate would shave that paperwork burden by forwarding court orders only to retirees who had told DFAS they want to be notified.

Warthen said future ex-spouses will be most pleased to see the 10-year rule end. When DFAS is barred from assisting with automatic payments, courts order retirees to make payments directly to ex-spouses. But many former spouses can’t “track down” retirees, she said.

“It causes great expense for spouses who have minimal income and minimal leverage to recoup (missed payments) or to go back to court for enforcement. Some of them just give up,” said Warthen.

The 10-year rule also has been an irritant to retirees. If DFAS can’t accommodate a court order, it continues to withhold taxes on full annuities, including whatever portion the retiree pays directly to an ex-spouse. This can complicate retiree plans to have ex-spouses share the tax burden.

The 10-year rule also can confuse lawyers, judges, retirees and spouses. The term suggests that retired pay can’t be divided unless a marriage lasts a decade. In fact, the 10-year rule impacts only automatic payments DFAS. As many retirees will attest, divorce court judges can, and do, divide retirement as property for marriages of any length.

Frank W. Ault, executive director of the American Retirees Association, an advocacy group for divorced military retirees, said ARA supports the Senate changes. Indeed, “abolition of the 10-year rule was one of our recommendations,” said Ault, referring to a package of legislative changes ARA drafted for Congress to consider last year. No lawmaker could be found to introduce it as legislation, however.

Ault said one ARA concern with the 10-year rule has been that without DFAS handling all court orders to divide retired pay, “we never really have known what the (USFSPA) population is out there. It’s an advantage for us to know that’’ in pushing Congress to make more substantive changes.

DFAS says it now divides with ex-spouses the retired pay of 82,887 military retirees. That number includes 4,046 court orders received in 2005 that satisfied the 10-year rule.

The House and Senate continue to approach the USFSPA with caution, avoiding changes perceived as tipping the law in favor of either retirees or of ex-spouses. The rationale for the Senate bill changes are taken from a comprehensive review of USFSPA that Defense officials completed in 2001.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at: